AOL is pruning employees from several of its web services, including the iconic AOL Instant Messenger. Executives at AOL have reportedly told The New York Times that the company laid off over 40 employees last Friday, and that a total of over 100 people will be eliminated over the coming weeks. So far, the cuts have mostly affected the company's West Coast US offices, particularly the Instant Messenger group. One former employee told the Times that the AIM department was "eviscerated and now only consists of support staff," and AOL has confirmed that the head of AIM products, Jason Shellen, is no longer with the company. Local news service Patch will also be scaled down.
The AOL layoffs have been rumored for the past several days. All Things D reported Shellen's departure last week, and some earlier rumors claimed that "hundreds" of employees would be let go. Reasons for the layoffs have also varied, but the Times' sources say that the AIM cuts are an attempt to increase profit margins on the $50 million a year that the service brings in. Before the layoffs, running AIM cost about $25 million a year; two AOL employees now say the company is looking to cut that to $2 or $3 million. In a statement, AOL said that it remained "committed" to its Silicon Valley presence, but that "we are making some strategic but very difficult changes to better align our resources with key areas of growth for us as a company." That's likely to mean less support for aging communication platforms like AIM and AOL Mail and a greater focus on media sites like The Huffington Post.